Navigant Research Blog

A New Business Model for Fuel Cell Vehicles

Lisa Jerram — May 11, 2016

With the first carshare program served exclusively by fuel cell vehicles (FCVs) set to open in Munich, Germany later this year, it is time to examine how FCVs might be able to transition from early commercialization to large-scale deployment. For close to a decade, FCVs have been inching forward along the path to broader commercialization. However, they are still vehicles that automakers only make available in limited production runs and are typically only for lease for limited periods of time.

Toyota is one car company that is making the leap to selling its fuel cell car outright. With a suggested retail price of $57,500, Toyota’s Mirai has been priced at a level that (when combined with incentives) could allow it to compete against luxury plug-in electric vehicles (PEVs) in terms of price. However, the Mirai is being sold in an environment where battery electric vehicles (BEVs) are able to offer longer ranges and much lower prices than other long-range PEVs currently available.

Mixed Results

Toyota has said that it aims to have 3,000 Mirai models in operation in the United States by the end of 2017. As of the end of 2015, the automaker had around 2,000 orders in the United States alone, and Consumer Reports gave the Mirai a favorable write-up. However, Toyota is still closely managing sales to ensure that customers who may lease it have driving habits that match the limited availability of hydrogen refueling. Indeed, the company has been delayed in delivering some cars to its customers, citing the lack of fueling stations needed to serve their customers as the reason.

The mixed results of the Mirai rollout thus far—real interest followed by delayed delivery—highlights the problem OEMs will face in commercializing fuel cell technology. Although BEVs also faced limited public charging availability when they were introduced, early adopters were those that could charge up at home, an option not available for FCV customers. This hurdle is one reason why Navigant Research’s 2015 Fuel Cell Vehicles report forecast modest FCV sales over the next 5 years. Nevertheless, Toyota is forging ahead with its commitment to fuel cell technology. The company recently said it would introduce a new, lower-cost FCV ahead of the 2020 Olympics in Tokyo.

Are there other ways to get around the infrastructure barrier? U.K. company Riversimple is looking to solve the problem by embracing the trend toward on-demand mobility, as is the previously mentioned Munich fuel cell carshare pilot. Riversimple wants to use the small city car segment as the entry point for FCVs in the commercial market. Instead of building a car for customer ownership, the company is developing a two-seater runabout (called the Rasa) that would operate within a region and fill local driving needs.

Riversimple’s business model is to place a fleet of cars into service in a locality and offer the use of the vehicles as a paid service, rather than selling or leasing the cars. This strategy helps bypass the need for an extensive network of refueling stations; instead, a few stations—perhaps even just one—could serve a single fleet of FCVs. Riversimple unveiled its rather unusual looking car earlier this year and has also launched a crowdfunding campaign.

Mobility as a service is a growing trend; it will be interesting to see if this can be successfully combined with FCVs to help push the technology past the infrastructure barrier.